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articles about “Government Shutdown

Shutdown Hasn’t Hurt October Asking Home Prices So Far

Asking home prices in the first half of October are up 1% versus September. Prices changes are no different in metros more dependent on the federal government, like Washington DC, compared with metros less directly affected by the shutdown.

Jed Kolko, Chief Economist
October 16, 2013

How has the two-week shutdown of the federal government affected home prices? The main sales-price indexes won’t tell us until 2014: homes going under contract in October will close in November (or later), and November sales prices will get reported starting in January. But the Trulia Price Monitor shows how asking prices – a leading indicator of sales prices – are trending almost in real time, adjusting for both the mix of listed homes and for seasonality. This morning we analyzed asking prices between October 1 and October 15.

Finding the Effect of the Shutdown on Asking Home Prices
Nationally, asking home prices are up 1.0% between September and the first half of October, seasonally adjusted. This partial month-over-month increase is roughly in line with the month-over-month increases over the past few months. Before the shutdown started, several factors were already cooling down price gains, including expanding inventory, higher mortgage rates, and declining investor activity. Therefore, comparing how much prices have risen in October to date with previous months can’t, by itself, show whether the shutdown has affected asking prices.

Instead, to tease out the effect of the shutdown on asking home prices, we looked at price trends across individual metros. We compared price changes in metros where the local economy is more dependent on the federal government – like Washington D.C., of course, but other metros around the country as well – with prices changes in metros where the local economy is less dependent on the federal government. (Our measure of dependence on the federal government – and therefore likely impact from the shutdown – is the share of local wages coming from the feds.)

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Metros That Could Suffer Most from a Federal Government Shutdown

The Washington D.C. economy would suffer most in a federal shutdown, but other metros across the country could also be hit especially hard.

Jed Kolko, Chief Economist
September 30, 2013

The federal government could shut down tomorrow. Those who rely on certain government services and programs would be immediately affected, as would the federal employees who wouldn’t get paid. If it goes on for a long time, the shutdown could hurt the economy and therefore housing demand, particularly in the metros where people depend more on federal paychecks for their livelihood.

We looked at the share of total local wages going to federal employees. No surprise that Washington D.C. and its suburbs depend most on federal paychecks: 18.5% of Washington D.C.-area wages go to federal employees, and 12.6% in neighboring Bethesda-Rockville-Frederick, MD.

But other metros – even some that are thousands of miles outside the Beltway – are also very dependent on the federal government: more than 10% of total wages go to federal employees in Virginia Beach-Norfolk, Honolulu, and Dayton, OH.

Metros Where A Government Shutdown Could Hurt Most

# Metro % of Local Wages Going to Federal Workers
1 Washington, DC-VA-MD-WV

18.5%

2 Bethesda-Rockville-Frederick, MD

12.6%

3 Virginia Beach-Norfolk, VA-NC

11.8%

4 Honolulu, HI

11.2%

5 Dayton, OH

10.1%

6 El Paso, TX

8.7%

7 Colorado Springs, CO

8.0%

8 Oklahoma City, OK

7.7%

9 Albuquerque, NM

7.3%

10 Bakersfield, CA

6.8%

Data from Quarterly Census of Employment and Wages (QCEW). See note below.

At the other extreme, less than 1% of total local wages go to federal employees in Fairfield County (across the Connecticut border from New York), San Jose, and Allentown, PA-NJ.

Metros Where A Government Shutdown Could Hurt Least

# Metro % of Local Wages Going to Federal Workers
1 Fairfield County, CT

0.5%

2 San Jose, CA

0.9%

3 Allentown, PA-NJ

0.9%

4 Lakeland-Winter Haven, FL

1.0%

5 Charlotte, NC-SC

1.0%

6 Orange County, CA

1.0%

7 Akron, OH

1.1%

8 New York, NY-NJ

1.1%

9 Hartford, CT

1.1%

10 Baton Rouge, LA

1.1%

Data from Quarterly Census of Employment and Wages (QCEW). See note below.

But San Jose and New York aren’t completely immune from the shutdown, of course: people and businesses there, like everywhere, depend on federal government services. Furthermore, the harm from a government shutdown would be minimal compared with the damage that the government could cause later this month if it hits the debt ceiling, stops paying some or all of its bills, and triggers a financial crisis. Everyone – not just federal employees and people who want to sell their homes to them – needs to be watching Washington D.C. this month.

These data are from the Quarterly Census of Employment and Wages (QCEW), which reports total local wages for all employees and for federal workers, for the first quarter of 2013. The metro rankings and magnitudes are similar using the share of employment (instead of wages) from the QCEW or from the American Community Survey (ACS).

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